Tariff-Jumping and the Form of FDI: Firm Level Evidence

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Tariff-Jumping and the Form of FDI: Firm Level Evidence

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Tekin-Koru, Ayca

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Ayca Tekin-Koru

Abstract

This paper carries out an empirical analysis with rich, firm-level data on the activities of Swedish multinationals around the globe in manufacturing sectors from 1987 to 1998 to test the main conjectures of traditional trade and recent views of the effects of trade costs on foreign entry. The results of the empirical analysis show almost no evidence of tariff-jumping foreign entry. On the contrary, high tariffs reduce the likelihood of cross-border M&As as conjectured by recent studies. At best, tariff-jumping is a possibility in the case of greenfield FDI or for large, multiple affiliate firms doing business in low-tech industries.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12989.

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Date of creation: Jan 2009
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Handle: RePEc:pra:mprapa:12989

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-01-31 (All new papers)
NEP-COM-2009-01-31 (Industrial Competition)

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